CMC Markets plc (LON:CMCX) Managing Director and Head of UK Chris Cheverall caught up with DirectorsTalk to discuss the growing demand for 24/7 market access, the expansion of CMC Connect, the role of API technology and how AI could create new distribution opportunities for the institutional business.
Q1: How are institutional client needs changing, and how is CMC Markets adapting its offering across liquidity, execution, technology, and market access?
A1: Liquidity is becoming increasingly important across all client types, not just institutional clients. While 24-5 liquidity is becoming commonplace, particularly for US equity market access, 24-7 liquidity is also becoming more common.
CMC Markets already offers weekend liquidity in crypto and gold and plans to extend this across its entire product range. The aim is eventually to make more than 20,000 products available on a 24-7 basis.
Technology is the foundation that makes this possible. For institutional customers, CMC Markets provides a robust and secure API, which is the main way the majority of institutional customers interact with the CMC Connect business, both in the UK and globally.
Q2: Where do you see the strongest areas of demand across CMC Markets today, and what is driving that growth?
A2: CMC Markets’ strength is not just in distribution, but also in product manufacturing. This includes liquidity, the execution stack and API technology.
Institutional customers are looking to service their own customers through existing propositions. For example, an institutional customer can retain its customer within its own app without having to build products, manufacture products, or provide liquidity and execution.
This is one reason partnerships work well. Partners do not need to focus on product innovation because they can use CMC Markets’ existing capabilities. An example is grey market US IPO equity access, which customers may demand but the partner does not have to build because CMC Markets manages it on an end-to-end basis.
Q3: CMC Connect is one of the fastest-growing areas of the business, what do you think is behind that momentum?
A3: CMC Markets’ experience has enabled it to partner beyond its traditional client footprint. The company is almost 40 years old and works with distributors in adjacent sectors and geographies.
End customers are demanding self-directed investment that is low cost, easy to access and embedded within a digital experience they already know. This is important to distribution partners.
CMC Markets combines a manufacturing engine with distribution partners that can have broad geographic footprints in adjacent sectors where CMC Markets does not compete directly. Together, this creates a partnership that can meet growing demand for easy and low-cost access.
Q4: How does CMC Connect differentiate itself in an increasingly competitive institutional market?
A4: There are relatively few providers with the scale and capital to compete at the same level. CMC Markets has been operating for many years but continues to innovate.
The company has the capital to invest continuously in technology and products, with investment capacity that Cheverall says is at a level most of its peer group cannot match.
Many competitors are aggregators and could, in some cases, also be customers of CMC Markets. For a partner looking to distribute using an original manufacturer, CMC Markets is positioned strongly within the ecosystem.
Q5: Looking ahead, where do you see the biggest opportunities for CMC Connect and the wider institutional business over the next few years?
A5: One of the biggest opportunities will be the development of an AI layer around customer access.
The application and interface associated with an API may not be replaced but could be enhanced with an AI layer. AI could increasingly be mediated through the API process. This could reduce barriers to entry for distributors, although not manufacturers, subject to mandatory regulatory and licensing requirements.
AI could open up additional distribution platforms and opportunities for CMC Markets. This is already being seen through online wealth managers adding CFD or trading products and payment service providers adding wealth or trading products.
Companies focused on distribution and customer experience may not want to concentrate heavily on product, market access, and liquidity. These are areas where CMC Markets can focus its expertise.
The company’s role as a product specialist and institutional partner therefore remains central to the CMC Connect business, while distribution opportunities centred on AI could provide significant opportunities going forward.
